PROTOCOL TO THE AGREEMENT BETWEEN THE FEDERAL REPUBLIC OF GERMANY AND THE REPUBLIC OF ARMENIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL
The Federal Republic of Germany and the Republic of Armenia (the "Contracting States") have in addition to the Agreement between the Federal Republic of Germany and the Republic of Armenia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital agreed on the following provisions, which shall form an integral part of the Agreement:
(1) With reference to sub-paragraphs b) and c) of paragraph 1 of Article 3 of the Agreement:
The Contracting States agree that international law shall take precedence at any time when determining the territorial scope of application of this Agreement.
(2) With reference to Articles 3, 8, 13, 14, 21 of the Agreement:
It is understood that the term "place of effective management" means the place where key management and commercial decisions that are necessary for the conduct of the entity´s business are in substance made. The place of effective management will ordinarily be the place where the most senior person or group of persons makes its decisions, the place where the actions to be taken by the entity as a whole are determined.
(3) With reference to Article 7 of the Agreement:
- (a) Where an enterprise of a Contracting State sells goods or merchandise or carries on business in the other Contracting State through a permanent establishment situated therein, the profits of that permanent establishment shall not be determined on the basis of the total amount received therefor by the enterprise but only on the basis of the amount which is attributable to the actual activity of the permanent establishment for such sales or business.
- (b) In the case of contracts, in particular for the survey, supply, installation or construction of industrial, commercial or scientific equipment or premises, or of public works, where the enterprise has a permanent establishment in the other Contracting State, the profits of such permanent establishment shall not be determined on the basis of the total amount of the contract, but only on the basis of that part of the contract which is effectively carried out by the permanent establishment in the Contracting State in which it is situated. Profits derived from the supply of goods to that permanent establishment or profits related to the part of the contract which is carried out in the Contracting State in which the enterprise is situated shall be taxable only in that State.
- (c) Payments received as a consideration for technical services, including studies or surveys of a scientific, geological or technical nature, or for engineering contracts including blue prints related thereto, or for consultancy or supervisory services shall be deemed to be payments to which the provisions of Article 7 of the Agreement apply.
(4) With reference to paragraphs 2 and 3 of Article 10 of the Agreement:
It is understood that in the case of the Federal Republic of Germany the following provisions apply:
- (a) It is understood that the term "dividends" used in Article 10 of the Agreement also includes distributions on certificates of an investment fund. For the purposes of this Agreement, the term "investment fund" means an investment fund as defined in the Investment Tax Act (Investmentsteuergesetz).
- (b) Notwithstanding the provisions of sub-paragraphs a) and b) of paragraph 2 of Article 10 of the Agreement, the tax shall not exceed 15 per cent of the gross amount of the dividends:
- (i) to the extent that distributions on certificates of an investment fund are directly or indirectly connected to income from immovable property as defined in Article 6 of the Agreement;
- (ii) where the distributing company is a real estate investment company whose profits are wholly or partially tax-exempt or which is entitled to deduct the distributions when determining its profits. A real estate investment company is a company under section 1 sub-section (1) of the Act on German Real Estate Stock Corporations with Listed Shares (REIT Act; Gesetz über deutsche Immobilien-Aktiengesellschaften mit börsennotierten Anteilen).
- (c) Notwithstanding the provisions of sub-paragraph a) of paragraph 2 of Article 10 of the Agreement, only the provisions of sub-paragraph b) of paragraph 2 of Article 10 of the Agreement shall apply to distributions on certificates of an investment fund in connection with any income other than that mentioned in sub-division (i) of sub-paragraph b).
(5) With reference to paragraph 2 of Article 11 of the Agreement:
It is agreed that if any agreement between Armenia and one of the current (as of the date of signature of this Agreement) member states of the Organization for Economic Co-operation and Development signed after the date of signature of this Agreement provides that interest arising in Armenia shall be exempted or taxed in Armenia at a lower rate than that which applies in this Agreement, then such exemption or lower rate shall automatically apply to interest governed by the provisions of this Agreement. In such case, it is further understood that the competent authority of Armenia will inform the competent authority of the Federal Republic of Germany without delay that the conditions for the application of this paragraph have been met.
(6) With reference to paragraph 3 of Article 11 of the Agreement:
It is understood that the provisions of paragraph 3 of Article 11 of the Agreement will also apply to other financial institutions wholly owned by the Government of the Republic of Armenia that have been agreed on by mutual agreement between the competent authorities of the Contracting States.
(7) With reference to paragraph 4 of Article 11 of the Agreement:
It is understood that the term "interest" does not include income dealt with in Article 10 of the Agreement as for example distributions on certificates of a German investment fund.
(8) With reference to Articles 10 and 11 of the Agreement:
Notwithstanding the provisions of Articles 10 and 11 of the Agreement, dividends and interest may be taxed in the Contracting State in which they arise and according to the law of that State if they:
- (a) are derived from rights or debt-claims carrying a right to participate in profits, including income derived by a silent partner ("stiller Gesellschafter") from his participation as such, or income from loans with an interest rate linked to the borrower's profit ("partiarische Darlehen") or profit sharing bonds ("Gewinnobligationen") within the meaning of the tax law of the Federal Republic of Germany, and
- (b) are deductible in the determination of profits of the debtor of such dividends or interest.
(9) With reference to sub-division (ii) of sub-paragraph e) of paragraph 2 of Article 22 of the Agreement:
It is understood that items of income or capital, or elements thereof, are actually taxed when they are included in the taxable base by reference to which the tax is computed. They are not actually taxed when they are either not taxable or exempt from tax.
(10) With reference to paragraph 5 of Article 23 of the Agreement:
It is understood that paragraph 5 of Article 23 of the Agreement shall not be construed as obligating a Contracting State to permit cross-border consolidation of income or similar benefits between enterprises.
(11) With reference to Article 25 of the Agreement:
If personal data is exchanged under Article 25 of the Agreement, the following additional provisions shall apply subject to the domestic laws of each Contracting State:
- (a) The receiving agency may use data in compliance with paragraph 2 of Article 25 of the Agreement only for the purpose stated by the supplying agency and shall be subject to the conditions prescribed by the supplying agency and that conform with Article 25 of the Agreement.
- (b) The information may be used for other purposes without the prior approval of the supplying State according to sentence 4 of paragraph 2 of Article 25 of the Agreement only if it is needed to avert in the individual case at hand an imminent threat to a person of loss of life, bodily harm or loss of liberty, or to protect significant assets and there is danger inherent in any delay. In such a case the competent authority of the supplying State must be asked without delay for retroactive authorization of the change in use. If authorization is refused, the information may no longer be used for the other purpose; any damage which has been caused by the change in use of the information must be compensated.
- (c) The supplying agency shall be obliged to exercise vigilance as to the accuracy of the data to be supplied and their foreseeable relevance within the meaning of paragraph 1 of Article 25 of the Agreement and the proportionality to the purpose for which they are supplied. Data are foreseeably relevant if in the concrete case at hand there is the serious possibility that the other Contracting State has a right to tax and there is nothing to indicate that the data are already known to the competent authority of the other Contracting State or that the competent authority of the other Contracting State would learn of the taxable object without the information. If it emerges that inaccurate data or data which should not have been supplied have been supplied, the receiving agency shall be informed of this without delay. That agency shall be obliged to correct or erase such data without delay.
- (d) The receiving agency shall on request inform the supplying agency on a case-by-case basis about the use of the supplied data and the results achieved thereby.
- (e) The receiving agency shall inform the person concerned of the collecting of data at the supplying agency. The person concerned need not be informed if and as long as on balance it is considered that the public interest in not informing him outweighs his right to be informed.
- (f) Upon application the person concerned shall be informed of the supplied data relating to him and of the use to which such data are to be put. The second sentence of paragraph e) shall apply accordingly.
- (g) The receiving agency shall bear liability under its domestic laws in relation to any person suffering unlawful damage in connection with the supply of data under the exchange of data pursuant to this Agreement. In relation to the damaged person, the receiving agency may not plead to its discharge that the damage was caused by the supplying agency.
- (h) The supplying and the receiving agencies shall be obliged to keep official records of the supply and receipt of personal data.
- (i) Where the domestic law of the supplying agency contains special deadlines for the deletion of the personal data supplied, that agency shall inform the receiving agency accordingly. In any case, supplied personal data shall be erased once they are no longer required for the purpose for which they were supplied.
- (j) The supplying and the receiving agencies shall be obliged to take effective measures to protect the personal data supplied against unauthorized access, unauthorized alteration and unauthorized disclosure.
DONE at Yerevan on 29 June 2016, in duplicate, in the German, Armenian and English languages, each text being authentic. In case of divergent interpretations of the German and Armenian texts, the English text shall prevail.
FOR THE FEDERAL REPUBLIC OF GERMANY:
FOR THE REPUBLIC OF ARMENIA: